Delhi District Court
Union Of India vs M/S Arsh Construction on 30 May, 2014
IN THE COURT OF MS. KADAMBARI AWASTHI:
CIVIL JUDGE-2 (CENTRAL): ROOM NO.231: TIS HAZARI
COURTS: DELHI
CS No. 132/14
Union of India
Through
Executive Engineering
CD No.3, Irrigation & Flood
Control Department
L.M. Band Office Complex
Shastri Nagar, Delhi
.........Plaintiff
Versus
M/S Arsh Construction
Through its
Sole Proprietor/Govt. Contractors
833, Sector-4, Pocket BNC
Vasant Kunj
New Delhi - 110018
....Defendant
Date of institution : 04.04.2009
Reserve for judgment on : 24.05.2014
Date of judgment : 30.05.2014
JUDGMENT
SUIT OF RECOVERY OF RS. 1,74,946/- ( RUPEES ONE LAC SEVENTY FOUR THOUSAND AND NINE HUNDRED FORTY SIX ONLY)
1. Vide this judgment, I shall decide the suit for recovery of Rs. 1,74,946/- filed by the plaintiff.
CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 1/14
2. Brief facts of the case are as per plaint are under :
It is stated that the plaintiff is the Government of National Capital Territory of Delhi and the present plaint is signed and verified by Sh. S.K. Achantani, Executive Engineer, CD No. 3, Irrigation & Flood Control Deparatment, L.M. Band at Shastri Nagar.
It is stated that the work of "Construction of PUCCA carpeted road on left side bank of Shahdara out fall drain RD 3800 meter to RD 900 meter on existing damaged road was awarded by the plaintiff/Govt. Of National Capital territory of Delhi to the defendant/Govt. Contractor vide letter No. F.3(99)/ACS/CD-III/2003-04/1783, dated 16.04.04. The stipulated date of initiating and completing the said work was 23.04.04 & 22.08.04 respectively and consideration amount of contract was Rs 19,43,846/-. An agreement having No 2/2004-05 was also stated to be executed between the parties. It is stated that the work was to be completed by the defendant within stipulated period, failing which, as per clause 2 of the agreement, the defendant was liable to pay compensation for delayed performance.
It is stated that in one year defendant/Govt. Contractor had completed only 60% of the work while as the stipulated time to complete the work was 4 months and work was carried out upto only 22.08.2004, inspite of the fact that entire site had been made available to the deft. Despite various letters & reminders being issued by the plaintiff (dated 24.05.04, 30.06.04, 21.01.05, 04.02.2005, 23.02.2005, 05.03.2005 & 29.03.05).
Defendant failed to increase the tempo of work and to complete it within stipulated time. It is stated that the Clause 2 of the agreement dated 16.04.2004 entered between the parties, empowers the Superintending Engineer of the plaintiff's to levy compensation on the Government Contractor i.e. in case the defendant do not complete the contract work within the time specified therein. The decision of the Superintending CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 2/14 Engineer in levying the compensation shall be final.
It is further stated that progress of work was delayed very much due to poor mobilization of labour & resources by the defendant and the defendant / govt. contractor failed miserably on all occasion to adhere to the targets given by him to the plaintiff from time to time despite the fact that the department / plaintiff co - operate in all respects with the defendant / Govt. Contractor would not be able to complete the work within stipulated time and the defendant / govt. contractor failed to complete the work within the extended period then plaintiff / department had no option except to rescind the contract against the defendant. It is further stated that despite various opportunities given to him by the plaintiff, the defendant / government contractor failed to complete the work within the extended time / completion period of time i.e. upto 24.05.2005 the date of recession of contract. It is further stated that as a result, a show cause notice was also sent to the defendant under clause 2 of the agreement by the plaintiff vide letter No F.3(99)/ACS/CD-III/2003-04/349 dated 21.04.2005. It is averred that despite repeated opportunities defendant failed to complete the work within stipulated period and even within extended time i.e upto 27.05.2005, as a result of which plaintiff received the contract vide letter dated 27.05.2005. Subsequently thereto, plaintiff vide letter dated 24.02.06 called upon the defendant to pay the compensation amount of Rs 1,94,385/- (Rupees One lac Ninety Four Thousand three hundred eighty five), as per clause 2 of the agreement.
Through letter No F.3(99)ACS/CD-III/2003-04/2261-2276 dated 17.08.06, department intimated to the defendant that an amount of Rs 77,754/- which was withheld has been adjusted against the way of compensation and now the defendant is required to pay only Rs 1,16,331/-.
It is further averred that vide award dated 31.05.2007, Ld. Arbitrator Sh. K.K. Verma released the part payment of Rs 58,315/- against CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 3/14 withheld amount of Rs 77,754/- under claim No 5 of the defendant where the defendant had claimed a sum of Rs 77,754. Thus, it is submitted that the defendant is now liable to pay the plaintiff a total amount of Rs 1,74,946/- on account of levy of compensation along with interest @ 18 % per annum is due towards the defendant/ government contractor. It is stated that plaintiff is left with no other efficacious remedy to recover the aforesaid amount from the defendant except to file the present suit. It is stated that the cause of action occurred at Delhi. It is further stated that parties work for gain in Delhi.
A prayer is made that a decree in the sum of Rs. 1,74,946/- along with pendente lite & future interest @ 18 per cent per annum from 24.02.2006 when the levy of compensation imposed upon the defendant till the realization of the amount be passed in favour of plaintiff and against the defendant.
Written statement on behalf of defendant filed and had taken preliminary objections stating that instant suit filed by the plaintiff is barred U/S 11 of CPC as the subject matter of suit was directly and subsequently in issue between the parties in arbitration proceedings which were decided by the Ld. Arbitrator Sh. K.K. Verma vide award dated 31.05.2007. It is stated that the action of the plaintiff to levy compensation under Clause 2 is not justified. It is further stated that no action was taken by the plaintiff even on the stipulated date of completion of the contract. It is further stated that contract in question have the provisions for extension of time as well as clause 2 for levy of compensation and thus time has not been the essence of the contract. It is further stated that if time is not the essence of the contract, clause 2 of the agreement becomes inoperative. It is stated that the legal position with regard to levy of compensation is well settled that if action is not taken as provided in the clause then the authority waives his right to take any such action. It is stated that present suit is liable to be rejected under the provisions of Order VII Rule 11 of CPC as there is no cause of CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 4/14 action to file present suit.
On merit it is denied by the defendant that as per para no.1 Sh. S.K. Achantani is an Executive Engineer and duly authorized office and constituted attorney of plaintiff. Para no.2 stated to be matter of record. In reply of para no. 3, it is submitted that there was no delay on the part of defendant, hence, it is denied that defendant is liable to pay any compensation under clause 2 of the agreement. It is stated that content of para no. 3 of the plaint are wrong and denied. It is denied that only 60 % of the work was done in one year. It is further denied that letter dt. 29.06.2004 and 08.07.2004 was written by the defendant and the entire site was available to the defendant.
In reply to para no. 5 it is submitted that the stipulated date of start of work and stipulated date of completion were 23.04.2004and 22.08.2004 respectively. The date of completion of work was unilaterally extended by the plaintiff till 28.02.2005 vide their letter dated 04.02.2005 respectively. It is submitted amongst letters mentioned by the plaintiff letters dated 30.06.2004 and 27.01.2005 have only mention about delay. It is further submitted that letter dated 30.06.2004 sent by the plaintiff is in reply to letter dated. 29.06.2004 sent by the defendant to cover up their failures to take decision for earth filling. It is also submitted that plaintiff had sent an illegal show cause notice dated 23.02.2005 due to official dominating position. Para no. 6 stated to be matter of record and need no reply.
In reply to para no. 7 and 8 it stated that these are false and incorrect and contrary to the admitted and proved facts. It is stated that the action of plaintiff to rescind the contract, when the time was not essence of the contract was illegal, unjustified and due to official dominating position. It is further stated that defendant could not further execute the work due to unavailability of hindrance free site and non payment of extra items.
In reply to para no. 9 of the plaint it is submitted that the alleged show cause notice dt. 21.04.2005 is an example of official CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 5/14 dominating position and cover up their breaches which was suitably replied by the defendant vide letter dated 18.05.2005. In reply to para no. 10-14 it is submitted that the Ld. Arbitrator cannot adjudicate clause 2, as being excepted matter hence, it is ultra vires to his jurisdiction and alleged adjustment of Rs 19,439/- is illegal which has been challenged by the defendant in separate proceedings.
In reply to para no. 15 the content of this para are stated to be wrong and denied. It is denied that the cause of action arose against the defendant on any of the date mentioned or the same is still continuing. In reply to the para no. 16-17 are stated to be wrong and denied. In reply to para no. 19 it is submitted that there is deficient court fee affixed on the plaint and the plaint of the plaintiff is liable to be rejected.
The plaintiff has filed replication to the written statements of the defendant wherein the content of the plaint reiterated and reaffirmed and allegation made in the written statement are categorically denied.
Vide order dated 18.03.2010 my Ld. Predecessor following issues were framed:
1. Whether the suit of the plaintiff is barred by Section 11 CPC ? OPD.
2. Whether the suit of the plaintiff is not maintainable in the present form? OPD
3. Whether the suit is barred by limitation? OPD
4. Whether the plaintiff is entitled to recover the suit amount as claimed in the plaint? OPP.
5. Whether the plaintiff is entitled to the interest on such amount, if so at what rate and for what period? OPD.
6. Relief.
In support of his case the plaintiff has examined PW 1 Mr. Mukesh Kumar and relied upon Ex. PW 1 /1 to Ex. PW 1/18. On the other hand defendant examined DW 1 Sh. R.P. Bhatia.
CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 6/14 In his cross examination witness PW1 stated that he is aware of the nature and scope of the work awarded to the contractor in respect of present case. A damage road was to be restored as per scope of work. Copy of agreement is already Ex. PW1/2, he further deposed that copy of bill on record, shows that only 60% of the awarded work was completed with in one year.
PW-1 claimed that a number of letter were sent to the defendant that pace of work was slow, i.e which are the PW1/3 and PW1/4 and letter dt. 22.5.2005 mark PW1/6. It is deposed that stipulated date of start of the work was 23.04.2004, and it was to be completed on 22.08.2004 four months duration. It is stated that stipulated date of completion of the work, was executed upto 27.05.2005. No compensation was levied upon the contractor when the time was extended. The contract was rescind on 27.05.2005. The Ex PW1/2 is the document by which, the time of the contract was extended, the witness again said that vide document Ex PW1/6 the time of the contract was extended.
It is claimed by PW-1 that various letters were written and final notice was also issued. It is deposed that show cause Notice Ex PW1/11 was also sent on 21.04.2005. It is submitted that at the time of deciding the extension of time the compensation was levied i.e vide Ex. PW1/13. It is also desposed that on, the date of award, the work was started,but with slow pace. It is denied that, there was any hindrance on the part of plaintiff to complete the work. It was admitted by the PW1 that work was to be done in three reaches i.e 705 meters, 720 and 1100 meters and on the first and second reaches the contractor completed the first activity and the first metallic coat before 12.05.2004, it till than it was already late/delay. The CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 7/14 witness could not confirm whether the payment of first RA bill was to defendant in May 2004, or whether the defendant completed the second metallic coat in June 2004 and had made the payment in June 2004. However it has been denied that in June 2004 defendant stacked the stone aggregate for the third reach and payment was made in second RA bill. PW1 could not tell whether in June 2004 only work of premixed carpeting and brickaging was left. He admitted that earth filing was not in the scope of the work and it not essential to fill earth before brickaging and it depends upon the condition of the site.
He could not confirm whether Ex. PW1/D1 was received by the department or not. He depose further, that the department did not do the earth filing as there was no necessity of earth filing at the site. It is denied that department directed the defendant to do earth filing. It is deposed that, in arbitration award claim for earth filing was awarded from subsequently " left out" , the work in respect of third reach and in first and second reach brickaging was not done. The defendant had not written any letter for extending the time. Show cause notice to deny the compensation before, 24.02.2006 was issued to the department, but copy was admittedly not on record. It is admitted that PW1/2 & D2 were received by the department. It is claimed that there was no hindrance on the site as mentioned in letter mark PW1/D2. It has been denied that site of third reach was occupied by Jhuggi dwellers. It deposed that there was no need of earth filing as asked by the defendant vide letter dt. 26.06.2004. It is denied that the department asked the contractor for earth filing and an additional amount would be payable for the same. He claimed to have that photocopies of the site order book and same was also mentioned in the award. It admitted that defendant was required to use FPS clay fly ash brick of class designation 75. the witness could not confront whether till Feb 2005, the brick were not not CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 8/14 available and letter to the defendant was written on 10.11.2004. It is is denied that the department refuse to do the brick edging after letter dated 10.11.04 sent by the defendant. It was could not be confirmed, whether the defendant completed the work of printing in first and second reach within stipulated period of completion of the work and two letter dated 25.05.04 and 30.06.04 were sent. It is also denied that the defendant completed the entire work where the site was without any hindrance.
DW-1 H.R.Bhatia, the witness, DW-1 has replied upon DW-1/1 and DW-1/2 i.e mark X as the documents is a photocopy.
He deposed that the name of the partner of my firm is Mr. Ashish Bhatia. He admitted to have not filed any authorization from filed any defendant firm in the present matter to depose. He deposed that his firm is in the filed of construction for about last fifteen years. He claimed that the firm works as a Government 'Construction'. The witness claimed to be well conversant with the rules and regulations in respect of Govt. tenders/ contracts. Since the firm has been in this field for about last fifteen years. He deposed that the firm was given construction for the road as mentioned in the bill in the qualities of schedule. Bill of quality schedule includes different items of work to be executed for which rates are to be qouted, It is part of a tender. It is admitted that whatever work is awarded to us a contract is executed with the department and same is singed by both the parties.
In his further cross examination held on 18.09.2013, the witness admitted that he was not present at the time of signing the contract between the parties. He claimed that the contract was executed by his attorney and all the correspondence were exchange under his guidance.
CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 9/14 He denied that he has no personal knowledge of the contract. He claimed that department did not give decision in the time which led to delay and expiry of the completion date and no extention was granted. He denied that delay in completition of work was due to their part but it was attributed to the department.
DW-1 admitted that the work was to be done in four months and further that with in four months only about 60% of the work was done. Since the work as per site availability and decision were not available could be done up to 60% only. He also admitted that before starting of the work the site was to inspected. The witness could not confirm whether any reminders/letters for completion of work dated 24.05.2004,30.06.2004, 27.01.2005, 04.02.2005, 23.02.2005,05.03.2005 and 29.03.2005 were issued to the firm. He denied that despite of issuing the above said reminders/letters the defendant has not made any progress in completion of the work. He admitted that there is a clause in the agreement dated 16.04.2014 where it is mentioned that in case of Govt. Contractor do not complete the work in stipulated time then SE of the plaintiff can levy compensation on the Govt. contractor. He further deposed that SE can operate this clause after the completion date is over. He denied that the work could not be done due to lack of resources and lack of labour. He could not confirm whether any show cause notice dated 21.04.2005 was issued to the defendant firm by the plaintiff or any reply there was sent by the firm. The witness could not able to tell whether the contract was rescinded and compensation was levied as per clause 2 of the agreement dated 27.05.2005. Without going through the records, or they are liable to pay any compensation to the plaintiff to the tune of Rs 1,74,946.
I have gone through the material available on record careful.
CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 10/14 Now my issue wise finding is as under :-
1. Whether the suit of the plaintiff is barred by Section 11 CPC ?
OPD.
&
2. Whether the suit of the plaintiff is not maintainable in the present form? OPD &
3. Whether the suit is barred by limitation? OPD Needless to say that the burden to prove these issue lies upon the defendant.
It is argued by the defendant that the suit of plaintiff' is barred under section 11 of the Code of Civil Procedure as the subject matter of the suit directely and subsequently in issue between the parties to the present suit in the arbitration proceeding which were decided by the Ld. Arbitrator Sh. K.K. Verma vide order dated 31.05.2005. Levying of the compensation was held valid and justified by the arbitrator.
The court is also in agreement to the contention of ld. counsel for the defendant. The court of the view that the aggrieved part was free to challenging the award before a competent court of law by moving objection under section 34 of the Arbitration and Conciliation Act 1996 or the award may be executed by filing a execution petition thereto. Though copies of a objection filed by the defendant are on record, but not a single sheet of proceeding is on record, which could manifest fate of it. Never the less, it is established law of the land, that principle of resjudicata are applicable to the arbitration proceedings as well as awards. A decree on an award given by CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 11/14 the arbitrators is conducive as resjudicata in proceedings for the enforcement of award. (Smita contractors Ltd. Vs Euro Alloys Ltd AR 2001 SC 3730). In the present case the arbitration clause was never disputed by the plaintiff. Despite award being passed in favour of plaintiff, the same could not be realized from the defendant.
To realized the amount of award filing a fresh suit is also barred , under section 9 of the Civil Procedure Code R/W Arbitration and Conciliation Act, the appropriate remedy would be either resort to execution of the award or to challenge the same by filling an objection under 34 of the Act.
It is held in a similar case, that where the dispute relating to escalation of price is referred to arbitrator as per clause in arbitration agreement, the arbitration would delay in execution of work of jurisdiction to award compensation for delay in execution of work and jurisdiction of the Civil Court would be barred. (Chief Engineer C.Z.T.C.V. Dayal construction Co. AIR 2005 under clause 34 (36).
I am of the considered view that no fresh suit lie on the ground, recovery based on an arbitration award the present suit not only hit by the bar of res-judicata, but also not at all maintainable in the present form since bar by virtue of section 9 CPC also apparent.
In the light of above deliberation, it is clear that there is no question arises suit being barred by limitation as it is not at all maintainable in the present form.
Hence for the reasons above state the issue No 1 & 2 are decided against plaintiff and in favour of defendant. Issue No 3 also decide CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 12/14 accordingly.
Findings on Issue No 4 & 5
4. Whether the plaintiff is entitled to recover the suit amount as claimed in the plaint? OPP.
5. Whether the plaintiff is entitled to the interest on such amount, if so at what rate and for what period? OPD.
The plaintiff has filed the present suit seeking recover of the amount of levy of compensation by the defendant vide order of Superintendent Engineer. Furthermore, the cause of action is also stated to be appeared and in continuation after the award of the ld. Arbitrator dt. 31.05.2007 where by it was ordered that that the claimants had made up their mind to abandon the work, stated facts in the and case law relied upon claimant are different from the facts of the case in hand. It is stated that while respondents are responsible for having not acted with due diligence in respect of the extra work of earth, filling the claimant had placed themselves in vulnerable position by abandoning the work in the available length of 700m in third stretch. Respondent could not have continued indefinitely with the albatross of an abandoned work around the neck. Thus the action of respondents to invoke the provision of clause 3 of the agreement and rescind the contract are in order and hence for the forfeiture of security deposit of Rs 97,712.00/- in legally valid.
It is argued by the defendant that the action of the plaintiff to levy compensation under clause 2 is not justified. It is stated that clause 2 of the conditions of the contract on the basis of which alleged action is taken provides the parameter for taking action if any.
It is also argued that the action under clause 2 of the CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 13/14 agreement was required to be taken strictly as provided in the said clause (2) was required to be taken, if not earlier, then on expiry of the stipulated date of completion. No action was taken by the plaintiff even on the stipulated date of completion of the contract. For the first time this action was taken by the letter dated 21.04.2006. It is claimed that the alleged action taken by the plaintiff was only after 18 months from the stipulated date of completion.
Ld. counsel for defendant placed reliance on Bhartiya Construction Co. V. Chairman Delhi Development Authority where it was held by the Hon'ble Court that if the action is not taken as per the manner provided under clause 2 of the agreement the authority waves the right to levy any such compensation.
Defendant also argued that contract in question have the provisions for extension of time as well as clause 2 for the compensation and thus the time has not been the essence of the contract. It is contended that if time is not the essence of the contract, clause 2 of the agreement would became inoperative.
From the above deliberation it is manifest that the stipulation period of completion was 22.08.2004. The work could not be completed because of the contractual failure on the part of plaint, further more no letter or complain from the plaintiff till 27.01.2005 was on record By letter dt. 04.02.2005 the time was extended upto 28.02.2005 by the plaintiff, Suo motto and on 27.07.2005 the contract was terminated. Suo motto, the point for consideration here is that extending the time of contract after the contract and cease to be the contract, where time is of essence and now it is to be seen whether a reasonable time lapse or not before the contract was rescinded. The answer to the first point is in affirmative and the contract is CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 14/14 manifestedly terminated by the plaintiff May 2005. Whereas the issue related to rate of interest on amount is concerned, it is apparent that there is no ground to decide the same in affirmative since no question arises of any compensation recovery to be awarded against defendant to the plaintiff.
As said earlier the remedy for the plaintiff was to either execute the award or challenge the same, which rest else where and forum chose by the plaintiff is not appropriate and as per law. In my opinion, all these issue have been look into by the Ld. arbitrator in his award and apparently the court does not exercise a appellate jurisdiction over the same to interfere with the findings. In the light of the issue No 1 & 2 decided earlier, I am of the view that since the case is hit by section 11 CPC and bar of resjudicata is apparent. Hence for the reason above state the issue No 4 & 5 are decided against plaintiff and in favour of defendant.
Relief Suit of plaintiff is dismissed. No order as to cost. File be consigned to Record Room.
Decreed sheet be prepared.
Announced in the open Court at (KADAMBARI AWASTHI) 4:30 p.m today i.e. 30.05.2014 Civil Judge-02/Central CS/132/14 UNION OF INDIA VS. M/S ARSH CONSTRUCTION 15/14